Capri Global Capital (NSE:CGCL) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Capri Global Capital Limited Q1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note this conference is being recorded. I now hand the conference over to Mr. Harvik Toshi, Head, Corporate Finance and Investor Relations. Thank you, and over to you, sir. Thank you. Good afternoon, everyone, and warm welcome to Q1 FY twenty twenty seven Earnings Call for Capri Global Capital Limited.

0:47 This is Hardik Doshi, Head Corporate Finance and Investor Relations. Before we begin, let me read out a brief disclaimer for today's call. The discussion around today's call regarding Capri Global Capital Limited's earnings performance is based on judgments derived from the results declared and information on business opportunities available to company at this time. The company's performance is subject to risks, uncertainties and assumptions that could cause results to differ in future. In that context, participants on today's call are advised to consider the same while interpreting the results. The complete disclosure is available on Slide 65 of the earnings presentation. Participants are requested to kindly take the note of the same. Format of the today's call would be opening remarks by the management team followed by Q and A. Let me now introduce the management team for the Capri Global Capital present on the call today.

1:37 With us, we have Mr. Rajesh Sharma, Managing Director and Promoter Ms. Divya Suthar, Executive Director, Business Strategy Mr. Kishore Loda, Chief Financial Officer and Mr. Sanjeev Srivastava, Chief Risk Officer. I would now request our Managing Director, Mr. Rajesh Sharma, to present his opening remarks on the results. Over to you, sir. Yes. Thank you, Adi. Good afternoon, everyone. I hope you all are doing well. We announced our unaudited financial results for the first quarter of FY twenty seven on July 27. I trust you have had the opportunity to go through our earnings presentation, which is also available on our website.

2:22 Before I move on to the financial and operational highlights, I would like to touch upon the broader operating environment and key developments during the quarter. Uncertain global geopolitical situation, energy security, oil and gold price volatility, rupee depreciation and volatile capital market led to overall macro environment being soft for the quarter. However, Indian economy continues to be resilient and better placed amongst global economies supported by its relatively higher GDP growth expectation, strong consumption driven demand, large employable workforce and faster adoption to rapidly evolving technology landscape.

3:09 Amidst the soft macro environment, I'm pleased to share that Capri Global has delivered yet another quarter of robust growth and profitability while safeguarding its asset quality. One of the major developments on the technology front is that we have now collaborated with OpenAI to bring enterprise grade generative AI across key business functions to transform the way we serve our customer, empower employees and build an AI native lending institution. Some of the other developments during the quarter were we established our first GMDN program for USD 1,000,000,000 global medium term note, which will enable us to diversify borrowing mix going forward.

3:56 Besides this to establish our brand presence and to support our expansion plans in South India, we have now collaborated with renowned actor, Nayantara, as our brand manager. With this backdrop, I'm glad to share that Capri Global continued its track record of delivering strong performance quarter on quarter in Q1 FY twenty twenty seven, delivered robust growth, while achieving highest ever quarterly profit after tax of INR $3.53 crores, a 102% increase year on year basis. Let me now come to detailed business and earnings performance for the quarter. We continued our strong momentum across all our lending businesses in Q1 FY twenty twenty seven.

4:46 Our consolidated AUM stood at INR 40,112 crores, reflecting a robust 62% year on year and 10% quarter on quarter growth. Gold loans grew an impressive 111% year on year and MSM grew at healthy 24% year on year, while housing loans rose 42% year on year. Disbursements for the quarter rose 31% year on year to INR 11,114 crores on account of growing customer base and widening distribution networks. Our growth remains granular, diversified and retail led with our customer base now exceeding 7.6 lakhs.

5:32 For our gold loan business, we delivered a strong and well balanced performance, in line with our strategic objective of growth driven by geographic expansion and branch productivity, while maintaining focus on effective risk management. Gold loan AUM saw robust growth to INR 19,179 crore, a sequential increase of 13% quarter on quarter despite the correction in gold prices, primarily led by healthy customer demand and improving brand productivity. Collateral weight in custody increased from 19 tonnes to 20.2 tonnes, an increase of 6% quarter on quarter and number of active customers increased by 11% quarter on quarter.

6:20 Following the addition of 89 branches in Q4 and 196 branches in FY twenty twenty six. Our gold loan branch network during the quarter stood steadily at 1,000 branches, allowing those branches to mature and contribute to productivity. Our aggregate branch productivity continued to see a strong gain and has increased now to INR 19 crore per branch versus INR 17 crore per branch at the end of previous quarter. Our branch expansion plan for this is underway, and we expect to add 150 plus branches by end of Q2, reflecting our commitment to expand our presence in Southern And Eastern India. On the employee front, the productivity front, while our AUM has increased significantly, our employee base increased only by 14% year on year, thus resulting in a significant improvement in employee productivity to INR 3.4 crore AUM per employee versus INR 1.8 crore a year earlier.

7:31 Despite the gold price volatility during the quarter, our efforts in controlling asset quality proved effective with gold loan growth NPA at 0.3%, amongst the best in the industry. Underscoring our focus on portfolio performance for the gold loan business, combining growth through capitalizing on vintage of existing branches while maintaining discipline on asset quality amid gold price volatility. Our MSME AUM grew to INR6779 crores, up 24% year on year and investments stood at INR616 crores for Q1 FY twenty twenty seven, up 32% year on year, led by steady execution and network expansion.

8:24 Our branches that opened in Uttar Pradesh in Q3 FY twenty twenty six are scaling up well and have started delivering INR 18 crores to 20 crores disbursement per month. We are further expanding our footprint into Telangana and Karnataka with 16 branches scheduled to become operational from Q3 of this year. Within MSME, our micro lab business, which enable us to serve emerging self employed borrowers with smaller ticket size requirement, is seeing steady growth, with AUM rising to INR $8.76 crore at the end of Q1 FY twenty twenty seven. On this segment, we implemented higher threshold for sourcing and selection of customers leveraging our data science capability, for example, a BRE and Bureau scorecard, getting criteria to disqualify non eligible customer upfront.

9:23 On our housing AUM stood at INR 7,815 crores, delivering a year on year growth of 42%. We continue to see resilient demand across the affordable housing segment, where rising income levels and low interest rate regime are driving demand for housing loans. Our expansion into high potential Southern India states such as Andhra Pradesh, Telangan and Karnataka with 30 plus branches in the last quarter is showing good traction with disbursement volume scaling up to INR65 crore per month. This strategic expansion is step towards geographical diversification, increased portfolio granularity and risk diversification while supporting improvement in yield over time.

10:11 Further, our yields in housing finance segment have been improving as a result of our continued focus on self employed customer segment, which now comprises about 75% of AUM. Our construction finance AUM saw healthy growth of 40% year on year to INR 6,332 crores spread across two ninety one active projects with an average pension ticket size of INR 41 crore and outstanding portfolio ticket size of INR 20 crore. The book remains granular, secured and well diversified by geography, reflecting our focus on working with mid sized developer in metro and Tier one cities. We continue to emphasize discipline in writing through rigorous due diligence and escrow based cash flow management, ensuring a risk containment approach.

11:04 Our total branch network remains steadily at fourteen thirty three branches locations in Q1 FY twenty twenty seven, with plans to open around 400 branches for the current year. We will continue to invest in expanding our network and geographical footprint in line with our goal of becoming a large scale Pan India retail lender. Now coming to earning performance, let me now provide an update on our core earnings. Our blended yield and spreads on net advances improved further in the quarter to 177.8%, respectively, driven by increasing shares of high yield products, increase in our gold loan yield and improvement in cost of borrowing.

11:57 Our net interest income for Q1 FY twenty twenty seven stood at INR $7.36 crore, up 79% year on year, driven by strong loan book growth and margin expansion. In line with our focus on building a diversified and resilient earning profile, we continue to strengthen our non interest income stream in Q1 FY twenty twenty seven, generating recurring quality fee income. Noninterest income grew 28% year on year to INR217 crores, contributing 23% on our net total income for the quarter. This strong increase was largely driven by growth in commission on insurance and card loan distribution. In our insurance distribution business, we generated net income of INR 42 crore during the quarter. The continued investment in technology and digital transformation established insurance insurance partnerships and distribution capabilities is helping us strengthen Capri Care, our digital platform, as a scalable and customer centric insurance platform.

13:03 Capri Care further expanded its product portfolio through the launch of 14 Life and general insurance product in partnership with leading insurers, strengthening the platform's ability to offer comprehensive insurance solutions. A significant milestone was the expansion of the Capri Care as an open market insurance distribution platform. The growing POSP network has enhanced insurance accessibility beyond the lending ecosystem, providing seamless access to the distributors, connectors and partners associated with the Capri Group, enabling efficient onboarding, policy issuance and customer service at greater scale. Going forward, we will continue to increase our insurance offering for gold loan, housing and MSME customers while expanding into cross sell of retail health and motor insurance through digital channels.

13:59 This digital first approach is expected to drive higher insurance penetration and meaningfully enhance fee income contribution over time. Our co lending and BA AUM surged 74% year on year to 8,126 crore and 4% quarter on quarter, now accounting for 20% of total AUM. Reflecting our strategy of capital efficient growth, coal lending volume slowed down during the quarter and grew by 4% quarter on quarter on account of new coal lending guidelines coming to effect and requirement of partner banks to move to CLM1 model of our 11 partners, six banks have already moved to CLM1 model.

14:49 We have completed tech integration for new arrangements with CLM1, and we are in the process of migrating other partner banks as well. To further enhance capital efficiency, we are also leveraging direct assignment in PTC instrument, which is showing a good demand and given higher share of gold loan and the GSL nature of our loan book, our income from core lending and DA for the quarter stood at INR 65 crores, down 8% year on year, driven by lower disbursed volumes. Our car loan distribution business grew strongly with origination of INR 3,280 crores in Q1 FY twenty twenty seven, up 43% year on year. With growing footprint and deep relationship across 13 partner banks and financial institutions, we have built a scalable platform with Pan India Network, which has potential to monetize further for distribution of other products.

15:56 On the expenses front, our operating expenses remained flat quarter on quarter. This was mainly driven by only modest increase in number of employees by 156 employees on account of branch and optimizations, in line with our guidance and conscious effort towards improving operational efficiency, our cost to income ratio further improved to 44.2% in Q1 FY twenty twenty seven compared to 49.4% in Q4 FY twenty twenty six. This sharp improvement signifies the benefit investment in technology, a vintage branch network and rising productivity and improving operational leverage across our businesses.

16:42 As a result of margin expansion, operating efficiency improvement and strong traction in fee income, our pre provision operating profit surged 171% year on year to INR $5.32 crores for the quarter. Further, we have continued our strong profitability momentum in Q1 FY twenty twenty seven, delivering a robust PAT of INR $3.53 crore, up a strong 102% year on year. Our return ratio considerably improved during Q1 FY twenty twenty seven with return on average equity at 19.1% versus 13% a year before and return on average asset at 4.1% versus 3.2% a year before. Coming to asset quality.

17:30 Now look at the trend on asset quality. Our gross Stage two assets increased by INR $3.85 crore, largely driven by increase of INR $3.73 crore in the gold loan, which is a low risk in nature. As a result, this our gross Stage two ratio for the quarter increased to 3.8% from 2.8% in previous quarter. At consolidated level, our gross Stage three ratio at 1.1% and net Stage three ratio stood at INR 0.6%, which is amongst the top quartile in the industry. During the quarter, our gross Stage three assets increased by INR74 crores quarter on quarter, mainly on account of this INR31 crore increase in construction, finance.

18:20 Our gross Stage three ratio for the other segment largely remained in range of range bound with a gold loan at 0.3%. Our impairment cost for the quarter stood at INR 62 crore, up by 16% quarter on quarter and was 0.7 on average total assets, which is in line with our historical average of 0.6% to 0.8%. During the quarter, we increased PCR on Construction Finance segment to 17.5% and PCR on consolidated level increased point 3%. This is in line with our prudent provisioning policy of maintaining healthy TCR across segments and keeping buffer for evolving macroeconomic conditions in the form of management overlay.

19:18 Coming to capital liquidity position and borrowings, let me now talk about our liability side. Our borrowing increased by 73% year on year and incremental borrowing sanction limits by around 3,868 crore during the current quarter. We added five new lenders relationship during the quarter, taking the active relationship now to 40 plus. We also continue to diversify our core our borrowings mix by raising funds through capital market borrowing, such as non convertible debentures and commercial paper, which now contribute to about 10%. During the quarter, we raised INR3868 crore from bank borrowing and INR1271 crore from non convertible debentures and commercial paper.

20:09 As a result of our active effort on repricing existing borrowing and CLR reduction and optimize ALM through charging mix, our cost of borrowing has been consistent improvement quarter on quarter. Our balance sheet remains robust with comfortable leverage ratio of 3.7x, capital adequacy ratio for the both entities remains quite healthy at 24.7% for the Capri Global Capital and 27.8% for Capri Global Housing Finance, thus providing headroom to support growth across business segment. Our liabilities are long tenure and our assets are short to medium tenure, placing us in a favorable position on the AUM front with cumulative surplus across all buckets. Liquidity remains comfortable with our INR 4,037 crores in cash and bank balance investment and undrawn credit lines.

21:11 Coming to technology. This quarter marks an important milestone in our technology journey. AI had moved beyond being a capability. We were building to become a capability that is delivering measurable business outcomes across organization, origination, underwriting, collection and customer engagement. Today, every customer interaction is analyzed by AI, not merely sampled. During the first quarter of FY twenty twenty seven alone, the platform analyzed 6.7 lakh customer calls, converting every conversation into structured intelligence. Beyond compliance monitoring. It identifies customer behavior pattern, implement intent, emergency signal, fraud indicators and sentiment shift generating insight that strengthen underwriting, optimize collection, strategies, improve customer engagement and support targeted coaching for frontline teams.

22:16 Beyond digital interaction, we have also created a rich layer of physical intelligence during the quarter. Over 2.64 lakh geotech field visits were recorded across sales, credit, personnel discussions, technical evaluation and collection activities. Every digit is digitally verified and a location stamp creating high end high quality field intelligence that symptom fraud detection, validate process adherence, enrich underwriting and collections data and provide a more comprehensive view on borrower's behavior than digital interaction alone. Together, this creates a continuously expanding data ecosystem where every transaction and every field interaction feeds back into AI models, AI volume scales the platform, becomes progressively smarter, enabling faster decisions, stronger risk management and improving operating efficiency, creating a compounding technology advantage that strengthen with every customer interaction.

23:29 Collection is where our AI platform deliver its most tangible financial impact. Cronos 4.0 is now deployed across the entire collection portfolio, continuously protecting repayment behavior, prioritizing customer outreach and optimizing the next best recovery action through a self learning decision engine. Every customer interaction feeds back into the model, making each subsequent intervention and more precise and improving recovery outcomes over time. Supporting this is our in house omni channel engagement platform, whose throughput has increased more than threshold from 166 to five twenty nine messages per minute, reducing campaign execution time by 53%.

24:26 In the first twelve days of June alone, the platform reached over 1.3 lakh customers with a 95.5% delivery rate for pre due communication, demonstrating its ability to execute large scale, highly targeted engagement with speed and consistency. Layered on top is our multilingual AI voice platform operating across nine Indian languages, which analyzes every customer conversation for repayment, intent, sentiment, risk signal and promise to pay while continuously enriching our collection intelligence.

25:11 Field recovery has also become technology led with our geotech collections widget, providing complete visibility, stronger governance and measurable execution on the ground. The business impact is already evident, nearly 90% of inbound payment across the organizations are digital with MSME and housing brands exceeding 93%, reflecting a decisive shift towards more efficient, lower cost and data lead recovery journey. Further, approximately 35% of collection across the MSME and housing finance verticals are now managed through technology enabled solutions and the direct digital engagement with customers create a scalable collection engine that simultaneously improve productivity, lower service cost, strengthen risk management and continuously enhance model performance on transaction volume growth creating a compounding operating advantage.

26:18 Underlying all of this is our API first micro services architecture processing nearly 70,000,000 external API transaction every month and enabling real time orchestration across origination, services and collections. As transaction volume increases, our AI model continuously learn and improve, creating a compounding advantage rather than a static technology platform. Most importantly, these are not technology metrics. This translates directly into faster turnaround times, lower operating costs, the stronger control and better collection, therefore operating levers that ultimately drive profitability.

27:08 And because every one of these systems improves, as it processes more transactions, the advantage compounds with scale making our technology platform an increasingly meaningfully competitive differentiator for the business. In addition, as part of our collaboration with OpenAI, over the coming months, we will explore the implementation of Secured AI powered deployments and workflows tools to enhance customer service, knowledge, management and the operational processes across its branch network. So in summary, four quarters ago, AI at Capri was about building capability.

27:55 Today, it is delivering measurable business outcomes. Before we open the floor for question and answer, let me sum up. We're delivering a strong performance in Q1 FY twenty twenty seven with healthy AUM growth across our key lending segments supported by a diversified and predominantly retail secured portfolio. Profitability improved further during the quarter, driven by all round performances across all metrics. Robust AUM growth, improving margins, strong growth in the fee income and opening leverage from our existing branch network, while asset quality remained resilient with a strong capital position and continued investment in technology and distribution, we are well positioned to scale proficiently and confident of revising our AUM target of INR 265,000 crore by FY twenty twenty eight and consistent return on average equity of 19% to 21% and return on average assets about 4.2% to 4.7%.

29:13 We shall now be happy to take questions. Yes sir, should we open the floor for Q and A? Yes please. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press 1 on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Kiran Shah with KSA Shares and Securities. Please go ahead.

30:12 Hello. Congratulations on a strong quarter. I just had a couple of questions. So on the stage two increase, can you please split the $3.84 crores sequential rise by segment? And is it recent origination, or is it seasoning on older vintages? And, also, why has the coverage been cut from 11.8% to 9.4% while the pool grew from 47%? What changed in the loss estimate and any mix shift into gold? Thank you. So your thank you for your first part of the question related to Stage two.

31:01 Out of INR $3.85 crore, which is increased in Stage two, INR 10 crore have increased in MSME, 15 crore have been increased in housing. Construction finance, it has been decreased by INR 13 crore. Gold loan, it has increased by INR $3.73 crore. Thus, total increment in Stage two by $3.85 crore. Gold loan primarily, it has gone up because the gold prices have on the lower side and quarter on quarter basis, we have seen the 4% decline in the price and that has resulted in more Stage two cases. Okay. And one more question on the project finance. So 125 crore under DCCO extension, is it inside or outside the 0.7% construction finance GNPA?

31:54 And also, is it real slippage or just the new norm? So it is outside, and the construction finance GMP is what, 7%? 0.7%. 0.7%. Yes, zero sir. And it is outside the? So DCQ cases are not considered as NPA. They are still considered as standard. Alright. Thank you so much, and all the best for the next call. You. Thank you. The next question comes from the line of Rishi Bhagal with Cochrane Bank. Please go ahead.

32:45 Yes. So first of all, congratulation to the Capri Global, one of the leading NBFC. And my question is, Ms. Divya posted one statement about the weak monsoon will impact on the gold loan increase. So my question is, if the monsoon comes stronger, then it will decrease the requirement of the boardroom. So what you say is, yes, if the monsoon is weaker, some of the microfinance and farmer, marginal farmer will go for the requirement to meet their cash gaps by way of adopting the gold loan. However, I think the normal growth will keep coming. And in any case, we are seeing that on a steady state basis, growing at 25% of book is absolutely possible.

33:47 Plus, we'll keep on adding the branches. So the more new branches will add the more growth. So the growth will happen by two accounts. Number one, from the existing branches in normal case about 25%, assuming that there's no growth in the gold loan prices, plus the new addition of the branches will further add to this. The next question comes from the line of Suhani Singh with ROTH Capital. Hello, sir. Good afternoon. So I had a couple of questions. Earlier, you had indicated plans to add around three fifty dedicated gold loan branches during FY twenty seven.

34:35 But however, the branch additions in quarter one appear to be relatively modest. So could you provide an update on the rollout plan? So our rollout plan will be in the Q2 quarter two about 150 branches. And then by balance Q3, we will add another two fifty branches. So total 400 branches, we should be up and running by Q3. That is the plan and I think plan is on the track. So are you still confident of achieving the full year branch expansion target? Should the addition be more back ended? So I think as we predicted as we communicated earlier, the branch expansion, now we have revised upward to 400 branches, and that will be completed on or before December 2026.

35:37 Okay. That helps, sir. Sir. So the gold loan yields have improved to around 18.6% this quarter. Do you believe the current yields are sustainable or should we expect some moderation of competition increase? So as a change in strategy, we have gone for the smaller ticket size and accordingly, we have changed our incentive plan to bring the attention on the smaller ticket size where the yield improvement is possible, which have taken place. So I think next quarter also we'll see some improvement in the yield and current improvement have happened to about 8.5%, I think another 50 basis to 75 basis further improvement will happen in the yield.

36:24 Okay. Got it, sir. Also cost of funds declined by around 10 basis points during the quarter. So given the current interest rate environment and your evolving borrowing mix, how should what scope do you see for reducing funding costs over the remainder of FY 2027? So I think FY 2027, we don't see much scope in the cost of fund reduction from this level. However, diversification perspective, we already approached public issuance of the bond, capital market, waging the commercial paper, raising the refinancing from institutions and then bank borrowings. And now some point of time, depending on the market condition, and we will also have set up the GMTN program, so we can access that offshore dollar bond market.

37:18 So there'll be enough diversification effort have taken place and we'll see that the overall bank borrowing percentage will come down. But as regard to the cost is concerned, I think cost will remain more or less stable during the remaining quarters. Okay, sir. Thank you so much and all the best. Thank you. The next question comes from the line of Soumya Raghuanshi with Nirva Securities. Am I audible?

38:08 Yes, ma'am. Am I audible? Yes, ma'am. You're audible. Please go Thank you so much for the opportunity. My first question was on gold loan mix. Gold loans now account for nearly 47, 48% of the overall AUM. Considering the recent volatility and correction in gold prices, how do you see the optimal portfolio mix evolving over the maximum medium term? Do you have an internal target for the gold loan contribution to the overall loan book? So I think in the medium term, gold loan should be or AUM mix should be about 55%.

38:59 Sir. Got it. So my next question is on MSME portfolio. As a percentage of overall AUM has gradually declined over the last few quarters, could you elaborate on the key reasons behind the strength? Is this largely function of faster growth in gold loans, or have you relatively more selective in MSME underwriting? So it was primarily because our... We were opening the new branches in the gold loan, and we wanted those branches to achieve profitability fast. So all the credit line allocation of capital was towards the gold loan segment. And keeping the overall growth in the range of about 50% to 60% annual growth, we have kept the gold loan in a higher priority. And accordingly, we have kept the very a measured way of growth in the MSME segment.

40:02 Okay, sir. Okay, sir. Got it, sir. That's it from my side. Thank you so much, sir. Thank you. The next question comes from the line of Navedita Chaudhry with ICIC Securities. Ma'am, we are unable to hear you. Yes, ma'am. Please go ahead.

40:48 Congratulations on a very good quarter, sir. So I have two questions. Firstly, earlier, we had targeted FY 'twenty seven AM target that was INR 47,000 crore. And now you have given INR65000 as FY 'twenty target. So is it correct to assume that we are also increasing FY27 target and with an average of adding INR3500 crores each quarter? Sorry? So I think FY 2027, we are on course to achieve INR 50,000 crores and by FY 2028, INR 65,000 crore. And you are right that quarterly basis So quarterly basis, it can be in the range about 3,000 to 3,500.

41:48 However, the last 0.5 are always higher than the first two quarters. All right. And can you please provide a product wise breakup of the disbursement? So we will give you those data offline. All right. Thank you so much, sir. Thank you. The next question comes from the line of with SS Family Office. Please go ahead.

42:35 Hello, sir. A very good afternoon to you. Sir, just a question on the organizational continuity. Sir, as we have seen over the past few years, we have observed a fairly elevated level of leadership transitions across the organization. So could you help us understand how the board thinks about leadership succession and retention and whether the current phase of organizational evolution is now largely behind us? And more importantly, what gives you the confidence that the company has reached a point where investors should expect greater stability and continuity in the senior leadership over the medium to long term? So I think if you see in totality, all the business has to drive the revenue, they are quite stable.

43:34 If you look at the our presentation, corporate presentation on the website, which clearly say that gold loan business had since the day we started it is there. Construction and finance business had since there almost about more than nine years. The housing finance, Chief Business Officer, almost ten years with us. So as far as MSM is concerned, the earlier business had about seven years after that, he has transitioned to somewhere else and we have got the replacement. So we cannot say that on the business side, there was any churning.

44:20 As far as the risk side is concerned, Babosha on the credit side is almost more than seven, eight years with us. CRO, Sanjeev Srivastava, who have joined almost three years with us. And so if you look at all these couple of barring one or two positions, all the positions, and that is quite normal that 10%, 20% churning in leadership happens. That is quite natural. So can the Board state that these leadership transitions were unrelated to any No. Etcetera or we we our Head of Internal Audit, CCO and CFO, when our housing subsidiary have achieved with scale and to comply the RBA regulation year to like the moment INR 5,000 crore team is achieved, we have to have a separate CCO and in the housing branch. So we have internally transferred from parent and we have to to the HFC.

45:29 So these three positions of Head of Internal Audit, CCO and CFO have been transferred from here to there. So it is not that they moved out. So you have to look at in totality. So I believe that if you look at all the numbers together, there was just transitions are normal and taking into account all these internal transfer, hardly it is very few positions as compared to industry or otherwise. Sir, in the last couple of years, you have seen multiple CEOs joining up and still the position is vacant. So when can we see the CEO coming up for the longer term in the There is no CEO position vacant, and there is no plan to bring any CEO.

46:18 Okay, sir. Thank you for answering me. All the best for the future. Thank you. Thank you. The next question comes from the line of Santosh Shetty with LGC Capital. Please go ahead. Good evening, sir. Hello? Yes. Go ahead. Sir, you had previously guided towards achieving a medium term ROI of 4.2% to 4.7% and ROE of 19% to 21%. With ROE already crossing the 4% mark in Q1, could you share the expected timing for achieving these targets ranges on a sustainable basis?

47:09 By FY twenty eight. I think we are quite confident to deliver this on a consistent basis despite remaining on the expansion phase 400 to 500 branches a year. Okay, sir. And sir, another one, while the car loan businesses continues to report healthy year on year growth, origination volume and the values have moderated subsequently during the quarter. Is this primarily driven by your strategy of prioritizing profitability growth? Or are you witnessing some moderation in demand or increased compression intensity?

47:56 So like how do you see this business evolving over the next few quarters? So I think in car loan origination, there is a distribution of car loan sourcing through our employee and dealer network and passing on to the bank to the technology platform. And in that, we follow the unit economics. So at the cost of profitability, we are not increasing the volume. There are some players who do the cash burn and grow their volume, but we are following a philosophy not to do the cash burn. And every transaction should result in some profitability. And we will not share the only growth. Growth has to be along in the for the profit region. And keeping in that philosophy, I think our growth in the car loan is happening to the extent, which is not causing us any kind of loss. But you will see next couple of years, these margins will improve because at some point of time, we are going to launch the used car loan product also, Asia pilot and then full fledged.

49:00 So we are not growing the book only because of the for the sake of numbers. Okay. Thank you so much, sir. Thank you for answering. Thank you. The next question comes from the line of with BD Group. Please go ahead. Hello. Congratulations on a good set of numbers, sir. So I have some follow-up questions. First is that spreads have expanded to approximately 7.8%. Right? So, like, which is significantly above historical levels. So, like, should investors consider this to be a sustainable level, or is there still scope for further improvements, like through product mix optimization and lower borrowing cost?

49:59 I think we believe that a spread will remain in this region only in the range of about 7.8% and maybe around 8% some point of time and gold loan proportion cross 52%, 53%. That is the time we can see about 8%. So it should be stabilized around that level. Okay. Okay, sir. And my next question is related to like cost to income. So like the cost to income ratio improved meaningfully, like, as operating leverage continues to play out. So, like, with significant branch expansions planned during there, how should we think about the trajectory of the cost to income ratio, like, over the next twelve to eighteen months? So I think next twelve to eighteen months, cost to income ratio should remain in this range.

50:52 It will not go further down, keeping in mind that we are going to add more branches and the more branches expenses will get offset in the larger volume from the older branches. So but cost income ratio, if you are able to maintain this 44%, 45%, I think this is good achievement and this will support us better the ROE and ROE. Great. Great, sir. And my last question is, like, given the recent corrections in the gold prices and the possibility of further So, like, how do you assess the potential impact on gold loan that... Gold gold loan disbursement and growth yields and asset quality?

51:38 And, additionally, like, what risk management measures are in place to mitigate these risks? So gold loan being a short nature, short term product and the gold loan prices does not fall in one move, 10%, 15%, 20%. There is a set automatic automated system driven margin call alert. And then some point of time when LTE breaches beyond a level of 85%, the auction notices are issued. So with that mechanism in place, I think it has proved to be well controlled and well behaved when the gold prices have fallen. We have seen in last six months, gold prices remain very volatile.

52:34 And quarter on quarter basis also, if you see there is a fall in the gold prices. So we don't see that despite fluctuation, there will be any risk on the asset quality side. The further fall in the gold loan prices might affect some kind of a growth, but we are still operating in 1,000 branches and intend to add more and more branches. I think that will not impact beyond a point to us. Thank you. Thank you, sir. Thank you. The next question comes from the line of with Share India Securities. Please go ahead.

53:31 Yes, sir. Congratulations on the good set of numbers. My first question was regarding the loan to value ratio for our gold loan. And secondly, tell what extent are we protected from a fall in pricing of gold? Can repeat the first part of the question again? What is the average loan to value ratio for gold loan? So average gold to loan ratio at the disbursement basis is about 71%. If you look at the Slide number seven of the presentation of the earnings, you will see that, that is displayed in Slide number seven.

54:17 So disbursement is about 71%. And this 29% margin is good enough margin from the risk perspective. Okay. Thank you. That answers my question. Thank you. The next question is from the line of with SK Securities. Please go ahead. Yeah. Hi. Can you hear me? Yes, please. Yeah. So so, sir, my question is regarding the asset quality. So there was a deterioration in the construction finance book where the GNPA increased from 0.3% to 0.7% this quarter on a Q o Q basis.

55:10 Sir, can you please elaborate a little more on the reason for that? And what can be the outlook on the asset quality going forward? So if you talk about the construction finance, there's one particular account have in the NPA, and we have also taken the provision of about 70% in that account. So that is the reason that asset quality in this quarter has gone up. But we have seen the cycle in construction finance that within six to nine months, we are able to recover these accounts, which are backed by strong collateral of project. We find some other project developer to take out the project and get out of the account. That we have shown repeatedly in the past in many occasions.

56:00 So in the even the current quarter also, we've seen the strong recovery of about INR 30 crore from the past old NP account. So this is normal and on steady state basis, this long term basis, I think we will not see any kind of volatility in construction finance. During the interim period, some accounts slip in the NP and then they again get recovered. But some point of time, then some other account happens. So this is a continuous exercise and continuous process. This keeps happening, and we keep recovering from old account. Okay. Nice to know that. And regarding the overall asset quality of our loan book, what is the outlook for the remaining quarters of this financial year? Like do we are we seeing any stress in any particular segments like MSME?

57:02 Or are like what's the overall outlook on the asset quality front or the guidance from your side? So since we are into 100% collateralized secured segment, we have seen that last few quarters, the collection efficiency have been very good and company have invested heavily on their own collection team of five twenty five plus team. We invest in the technology, data science capability and we culturally also, we felt very strong collection culture in the company. So we believe that there'll be not much surprise in the collection side. Current gross NPA are about 1.1% and net NPA is about 0.6%.

57:47 I think this is a very, very good numbers. We don't see any reduction from here. But at the same time, the kind of price level, yield level we are landing in all these products, our own benchmarks are G and P of about 2% and that is 1%. These numbers are much below that. And so it reflects that our good performance in terms of asset quality and collection efficiency. Okay, you.

58:32 Ladies and gentlemen, due to time constraint, that was the last question for today. I now hand the conference over to the management for closing comments. I thank you for participating in the earnings call today. I would reiterate, we are committed to delivering strong and consistent performance quarter on quarter and are glad to revise our AUM guidance upwards to INR 65,000 crore by FY 2028, a 30% plus CAGR with return on average equity of 19% to 21% and return on average assets of 4.2% to 4.7%.

59:22 Should we have any questions, you can reach out to us or our IR advisers and we shall be happy to answer your queries. Thank you once again, and have a happy week ahead. Thank you. Thank you, sir. On behalf of Capri Global Capital Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.